The Long Term Stock Exchange (LTSE) opened for business today. The LTSE is the creation of Eric Ries and it received regulatory approval from the Securities and Exchange Commission back in May 2019.
The exchange opened its doors for trading of all US exchange-listed securities with a pointed mission of supporting long term growth as opposed to a quick buck. Shares listed either on the LTSE or another exchange will trade in real-time across all markets.
The LTSE becomes the 14 regulated exchange in the US with more in the queue.
The LTSE also offers a software platform for early-stage firms called LTSE Bridge. The tech helps startups to better manage investors, cash, and more.
The LTSE holds the following five principles with a strategy of long term focused firms. According to the exchange, the goal is to support a “broad group of stakeholders, measure success in years and decades, align compensation of executives and directors with long-term performance, engage directors in long-term strategy (and grant them explicit oversight of this strategy), and engage long-term shareholders.”
Ries said they are thrilled to open their doors for investors and firms that are long term focused:
“Modern companies want to innovate consistently, minimize pressure to hit short-term targets, join with long-term investors, and run their businesses with the stewardship that stakeholders and society demand. The Long-Term Stock Exchange offers companies a new way to be public that supports the building of sustainable businesses, tightening ties with investors who share a long-term horizon, and a stakeholder approach,” said Ries.
Ries, the creator of the lean startup concept, came up with the idea of the LTSE nine years ago. In a blog post, he said that while researching his book he kept hearing about the current shortcomings in existing markets.
The debate regarding quarterly driven estimates, outlandish executive packages not tied to balanced goals, has been ongoing for years. The talking heads that populate the business news cycle help to foster a trading environment that at times looks more like a casino with asset managers pumping their own books and advisors telling retail investors to trade as opposed to investing.
Ries believes that innovation has been “held hostage” to boom-bust cycles – something he is attempting to address:
“… abrupt changes in governance, struggles to maintain constancy of purpose, and the difficulty for public companies in knowing who their long-term shareholders even are. One of the few things that pretty much everyone agreed on is that the focus on the short term undermines the building of sustainable businesses,” stated Ries.
Ries envisions the LTSE as “one brick in a new foundation for our civic society.” Of course, the proof will emerge as to whether, or not, the LTSE will be able to sustain its values and focus on success measured in years instead of quarters.